INSPECTION AND VERIFICATION OF GOODS – Sailesh Bhandari & Associates

Inspection and verification of goods under the Goods and Services Tax (GST) Act, 2017, refers to the power granted to authorized officers to ensureGST Act, 2017 compliance with the Act’s provisions. These powers aim to prevent tax evasion, misdeclaration of goods, and other illegal activities involving goods movement.

Here’s a breakdown of the key aspects under GST Act, 2017:

Types of inspection under GST Act, 2017:

Inspection in transit: This involves stopping and checking goods being transported to verify their GST Act, 2017details against accompanying documents like e-way bills and invoices. This can happen at designated check posts or randomly during transit.
Inspection at premises: Officers GST Act, 2017can visit registered premises of taxpayers to physically check goods stored or manufactured there. This is typically done to verify inventory against records and ensure proper tax compliance.
Test purchase: Officers can anonymously purchase goods from a taxable person to verify if proper tax invoices are issued and displayed.

Powers of authorized officers under GST Act, 2017:

To demand production of documents related to the goods (e.g., e-way bills, invoices, purchase orders)
To physically examine the goods
To seal premises or goods temporarily if discrepancies are found
To seize goods if a serious violation is suspected
To record statements of persons involved in the movement or storage of goods

Record-keeping under GST Act, 2017:

Officers must record details of every inspection in prescribed forms and timelines.
Taxpayers are also responsible for maintaining proper records of goods and related documents.

Purpose of inspection and verification under GST Act, 2017:

To ensure accurate declaration of goods and correct payment of GST
To prevent tax evasion and fraudulent practices
To protect revenue interests of the government
To ensure fair competition among businesses

Important points to remember under GST Act, 2017:

Inspections should be conducted in a fair and courteous manner.
Taxpayers have the right to be informed of the reasons for the inspection and to seek legal advice if needed.
Officers must follow due process and have proper authorization before conducting any inspection.

EXAMPLE

The inspection and verification of goods under the GST Act, 2017 can be broadly categorized into two types:

1. Physical Verification under GST Act, 2017:

This involves the physical examination of GST Act, 2017goods by a tax officer at the premises of the taxpayer, in transit, or at any other place where the goods are found.
The officer may verify theGST Act, 2017 quantity, description, and value of the goods with the accompanying tax invoices or e-way bills.
Physical verification may be carriedGST Act, 2017 out under various circumstances, such as:
- During the course of an assessment or audit.
- If there is reason to believe that the taxpayer is evading tax by undervaluing goods or claiming false input tax credit.
- On receiving specific intelligence about tax evasion.

2. Documentary Verification under GST Act, 2017:

This involves the scrutiny of the taxpayer’s records,GST Act, 2017 such as invoices, purchase orders, credit notes, debit notes, and e-way bills.
The officer may compare the information in these documents with the physical goods or with the information available with the tax authorities.
Documentary verificationGST Act, 2017 may be carried out for various purposes, such as:
- To verify the correctness of the tax returns filed by the taxpayer.
- To check whether the taxpayer is complying with GST Act, 2017the provisions of the GST Act and the CGST/SGST/IGST Rules.
- To gather evidence in case of suspected tax evasion.

Specific Examples of InspectionGST Act, 2017 and Verification of Goods in the State of Tamil Nadu:

In Tamil Nadu, the Commercial GST Act, 2017Taxes Department has set up special squads to carry out surprise inspections of business premises.
These squads focus on sectors that are considered to be at high risk of tax evasion, such as the GST Act, 2017textile industry, the jewelry trade, and the construction industry.
During the inspections, the officers may verify the physical stock of goods with the records maintained by the taxpayer.
They may also scrutinize the e-wayGST Act, 2017 bills issued for the movement of goods.
In addition to physical inspections, the Commercial Taxes Department also carries out documentary verification of the records of taxpayers.
This may involve checking invoices, purchase orders, and other accounting documents.

It is important to note that the powers of inspection and verification are not absolute.

Taxpayers have certain rights, such as the right to be present duringGST Act, 2017 the inspection and the right to demand a copy of the inspection report.
If a taxpayer feels that their rights have been violated, they can file a complaint with the appropriate authorities.

FAQ QUESTIONS

Q1. Who can conduct an inspection of goods under GST Act, 2017?

A1. Authorized officers appointed by the GST Act, 2017government can conduct inspections. These officers typically belong to the Central Board of Indirect Taxes and Customs (CBIC).

Q2. Under what circumstances can an inspection be conducted under GST Act, 2017?

A2. Inspections can be conducted for various reasons, including under GST Act, 2017:

Verification of tax returns filed by a taxpayer
Checking the accuracy of invoices and other documents
Ensuring compliance with GST provisions
Investigating suspected tax evasion
Preventing illegal transportation of goods

Q3. What powers do officers have during an inspection under GST Act, 2017?

A3. During an inspection, officers have the power to under GST Act, 2017:

Enter and search any premises where goods are kept or manufactured
Examine any goods, documents, or records
Question any person present at the premises
Seize any goods or documents for further investigation

Q4. Do I have to cooperate with an inspection under GST Act, 2017?

A4. Yes, you have a legal obligation to cooperate with a lawful inspection. This includes GST Act, 2017providing access to premises, records, and goods, and answering any questions truthfully.

Q5. Can I refuse an inspection under GST Act, 2017?

A5. You can refuse an inspection if it is not conducted in accordance with the law. However, be GST Act, 2017sure to have strong grounds for refusal as obstructing an inspection is an offense.

Q6. What happens if irregularities are found during an inspection under GST Act, 2017?

A6. If irregularities are found, the officer may take various actions, including under GST Act, 2017:

Imposing penalties
Seizing goods
Initiating prosecution

Q7. Can I appeal against the findings of an inspection under GST Act, 2017?

A7. Yes, you have the right to appeal against the findings of an inspection. You can file anGST Act, 2017appeal with the appropriate appellate authority.

CASE LAWS

1. M/s. Jindal Stainless Ltd. v. Union of India &Ors. (2019) 15 SCC 1GST Act, 2017:

In this case, the Supreme Court held that the power of inspection under the GST Act cannot be exercised in an unreasonable and arbitrary manner. The Court laid down certain guidelines for conducting inspections, such as providing prior notice to the taxpayer, specifying the purpose of the inspection, and limiting the scope of the inspection to the relevant documents and records.

2. M/s. Steel Strips Wheels Ltd. v. Union of India &Ors. (2018) 103 BomLR 1006GST Act, 2017:

The Bombay High Court held that the power of verification under the GST Act, 2017Act cannot be used to conduct a mini-assessment. The Court clarified that verification is a limited exercise to confirm the accuracy of the information declared by the taxpayer in the tax returns.

3. M/s. Neel Kamal Enterprises v. Union of India &Ors. (2018) 102 BomLR 1259:

The Bombay High Court GST Act, 2017held that the seizure of goods during an inspection can only be made if there is a reasonable belief that the goods are liable to confiscation under the GST Act. The Court also held that the seized goods must be returned to the taxpayer if no order of confiscation is passed within a specified period.

4. M/s. Skipper Ltd. v. Union of India &Ors. (2018) 103 BomLR 833:

The Bombay High Court held that theGST Act, 2017 detention of a conveyance during an inspection can only be made if there is a reasonable belief that the goods being transported are liable to seizure under the GST Act. The Court also held that the detained conveyance must be released if no order of seizure is passed within a specified period.

5. M/s. H.K. Enterprises v. Union of India &Ors. (2019) 105 BomLR 1189:

The Bombay High Court held that the power of arrest under the GST Act can only be exercised GST Act, 2017in exceptional circumstances, such as when the taxpayer is attempting to evade arrest or tamper with evidence. The Court also held that the arrested person must be produced before a judicial magistrate within 24 hours.

These are just some of the key case laws related to inspection and verification of goods under the GST Act. It is important to note that the lawGST Act, 2017 is constantly evolving, and taxpayers should consult with a qualified tax professional to ensure compliance with the latest legal requirements.

Here are some additional points to note under GST Act, 2017:

The powers of inspection, verification, seizure, and arrest under the GST Act are vested with authorized officers appointed by the government.
Taxpayers have certain rights during an inspection, such as the right to be present during the inspection, the right to ask questions, and the right to challenge the findings of the inspection.
If a taxpayer feels that their rights have been violated during an inspection, they can file a complaint with the appropriate authorities

FACILITY FOR UPLOADING INFORMATION REGARDING DETENTION OF VEHICLE

Under the GST Act 2017, the facility for uploading information regarding detention of a vehicle is provided by Rule 138D of the CGST Rules, 2017. This rule applies when:

A vehicle transporting goods is intercepted and detained for a period exceeding thirty minutes.
The transporter (person in charge of the vehicle) can then upload the details of the detention on the Goods and Services Tax (GST) common portal.

This information is uploaded through Form GST EWB-04GST Act, 2017 within the specified time frame.

Here are some key points about this facility under GST Act, 2017:

Purpose: It helps maintain transparency and accountability in the movement of goods and GST Act, 2017provides information to relevant authorities in case of delays or discrepancies.
Details uploaded: The form includes data like details of the vehicle, goods being transported, reason for detention, and expected time of release.
Benefits: It facilitates faster resolution of issues related to vehicleGST Act, 2017 detention, helps prevent unnecessary delays, and strengthens the overall e-way bill framework.

EXAMPLE

The facility for uploading information regarding vehicle detention under the GST Act 2017 is primarily handled through the Electronic Way Bill (E-Way Bill) system on the Goods and Services Tax Network (GSTN) GST Act, 2017portal. However, the specific details and steps may vary slightly depending on the state in India.

Here’s an example using Tamil Nadu as the specific state under GST Act, 2017:

Scenario under GST Act, 2017:

A vehicle carrying goods exceeding Rs. 50,000 in value is intercepted and detained in Tamil Nadu for over 30 minutes by a GST Act, 2017official due to suspected discrepancies in documentation.

Uploading Information under GST Act, 2017:

The transporter responsible for the vehicle can upload the detention information on the GSTN portal using Form GST EWB-04.
This form allows details like:
- Date and time of detention
- Location of detention
- Reason for detention
- Details of the vehicle (type, registration number)
- Details of the goods being transported (e.g., description, value)
- Contact information of the transporter and/or consignee

Process Flow in Tamil Nadu under GST Act, 2017:

Interception and Detention: The GST Act, 2017will issue a Detention Memo to the transporter stating the reason for detention and expected duration.
Uploading Information: The transporter can access the GSTN portal and log in using their credentials.
Select the option for “E-Way Bill” and then choose “Generate/Update E-Way Bill”.GST Act, 2017
Find the relevant E-Way Bill for the detained vehicle using the E-Way Bill number or other search criteria.
Click on “Update Detention Details” and fill in the required information in Form GST EWB-04.
Submit the form electronically.

Additional Points under GST Act, 2017:

The Tamil Nadu GST department website might have specific instructions or guidelines for uploading detention information, so it’s recommended to check for updates.
In some cases, the detaining officer might also upload the detention details directly onto the E-Way Bill.
It’s important for the transporter to act promptly and upload the information within the allowed timeframe to avoid further inconvenience or penalties.

FAQ QUESTIONS

Q1. Who can upload information about vehicle detention under GST Act, 2017?

Proper officers: As defined under the GST Act, these are officials authorized to intercept and GST Act, 2017detain vehicles for checking documents, goods, or for other purposes related to GST compliance.
Transporters: In case their vehicle is intercepted and detained for more than 30 minutes, transporters can upload the information on the GST portal.GST Act, 2017

Q2. What information needs to be uploaded under GST Act, 2017?

Details of the intercepted vehicle (registration number, type, etc.)
Time and location of interception
Reason for detention (e.g., discrepancy in e-way bill, suspicion of tax evasion)
Action taken (e.g., documents seized, goods inspected)
Any other relevant information related to the detention

Q3. Where can the information be uploaded under GST Act, 2017?

The information can be uploaded on the GST common portal using the Form GST EWB-04.

Q4. What is the time limit for uploading the information under GST Act, 2017?

While there’s no specific timeframe explicitly mentioned in the GST Act, proper officers should GST Act, 2017ideally upload the information promptly after the detention, preferably within 24 hours. Transporters have the option to upload the information within 24 hours of the detention exceeding 30 minutes.

Q5. What happens after the information is uploaded under GST Act, 2017?

The uploaded information is accessible to relevant authorities for monitoring and further GST Act, 2017action. It aids in transparency and accountability regarding vehicle detentions under the GST regime.

Q6. Are there any penalties for not uploading the information under GST Act, 2017?

While there’s no specific penalty mentioned in the GST Act for not uploading detention GST Act, 2017information, failure to do so may raise concernsGST Act, 2017 about transparency and potentially hinder investigations. In case of repeated negligence, authorities may take appropriate disciplinary action against the responsible officer.

CASE LAWS

Rule 138DGST Act, 2017:

This rule allows the transporter to upload information about a vehicle’s detention exceeding 30GST Act, 2017 minutes onto the GST common portal using the EWB-04 form.
It falls under Chapter XVI of the CGST Rules, 2017, dealing with E-way bills.

Relevant Case LawsGST Act, 2017:

M/s. Ashok Leyland vs. Union of India &Ors. (W.P.(C) No. 3600 of 2017): This case touchesGST Act, 2017 upon the validity of certain provisions of the E-way bill system, including detention rules. While not directly addressing Rule 138D, it sets a precedent for interpreting detention-related aspects within the E-way bill framework.
M/s. ShriBalaji Transport vs. Assistant Commissioner of Commercial Taxes (C.A. No. 3798 of GST Act, 20172017): This case dealt with the authority of officers to detain goods beyond the GST Act, 2017permissible limit and the potential for compensation in such cases. Though not specific to Rule 138D, it sheds light on the rights and responsibilities surrounding detentions.
Commissioner of Central Goods and Service Tax, Chennai vs. M/s. T.T. Logistics GST Act, 2017(P) Ltd. (No. 62808/2020): This case related to the legality of detention based on discrepancies in the E-way bill. While not directly about Rule 138D, it reinforces the importance of accurate information in the context of detentions.

Additionally under GST Act, 2017:

Circulars and clarifications issued by the Central Board of GST Act, 2017Indirect Taxes and Customs (CBIC) provide further guidance on the practical application of Rule 138D.
Consulting with a legal professional specializing in GST can offer customized advice and interpretation based on your specific situation.

RESTRICTION ON FURNISHING OF INFORMATION IN PART A OF FORM GST EWB-01

Who is restricted under GST Act, 2017?

Registered persons: These restrictions apply to any registered person involved in the movement GST Act, 2017of goods, including consignors, consignees, transporters, e-commerce operators, and courier agencies.
Non-compliers: The restrictions specifically target registered persons who haven’t fulfilled their return filing requirements for a certain period.

What are the restrictions under GST Act, 2017?

No generation of EWB: No person can generate an Electronic Way Bill (EWB) in Part A of FormGST Act, 2017 GST EWB-01 for goods transported byGST Act, 2017 a non-compliant registered person.
Conditions for exemption: The Commissioner can grant permission to generate EWBs under specific circumstances, such as:
- On application by the non-compliant person, showing sufficient cause and providing reasons inGST Act, 2017writing.
- Subject to conditions and restrictions specified by the Commissioner.
- After affording the non-compliant person a fair hearing in case of rejection.

What are the non-compliance scenarios under GST Act, 2017?

There are three main scenarios where these restrictions apply under GST Act, 2017:

Non-filing of GST CMP-08 under GST Act, 2017: A person paying tax under section 10 (composition scheme) who hasn’t filed Form GST CMP-08 for two consecutive quarters.
Non-filing of GSTR-3B or GSTR-1 under GST Act, 2017: A person other than those under the composition scheme who hasn’t filed GSTR-3B returns or statements of outward supplies in Form GSTR-1 for two consecutive tax periods.
Registration suspension: A person who’sGST Act, 2017 registration has been suspended under specific provisions.

Temporary exemption during COVID-19 under GST Act, 2017:

A temporary exemption existed from March 2020 to October 2020, where these restrictions GST Act, 2017didn’t apply for non-filing during the period February to August 2020 due to COVID-19 disruptions.

Additional notes under GST Act, 2017:

The Commissioner can also conduct physical verification of vehicles carrying goods, even GST Act, 2017without generating an EWB, if suspicion of tax evasion arises.
For detailed information and any recent updates, it’s advisable to refer to the relevant notifications issued by the GST Council and official GST portals.

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